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    Forex Trading In Islam (Permissible or Not)

    Hello Friends,

    I don't know if it is the right section, because the section's name is Trading from A to Z, so I am pretty sure that my thread comes in the same category. The purpose of opening that thread is: Knowledge to inform you and getting yours information in my knowledge, so I may know what you have and you may know what I am saying.

    Well, in past years when people were very concerned about FX, they went to some of the online scholars asking that whether is it okay to go ahead with marginal FX trading or not, and most of the time, there used to be an answer that No, marginal trading is not permissible. At that time, there were no swap-free accounts but now, large number of brokers offer this swap-free account including RoboForex.

    We must realize that there are many grey areas which most people (even scholars) are unable to understand. No wonders that some scholars, who are well in finance world suggests to go with it.

    Let me give you the example of Dr Zakir Naik. Dr Zakir naik is a stocks trader, and i watched his video on the internet regarding stocks and he mentioned there that: "Margin trading is halal as long as no interest is charged"

    What is annoying me is the fact about leverage in Forex which is not mentioned anywhere in the internet.

    Difference between the marginal trading (leverage) in stocks and marginal trading (leverage) in Forex:

    I hope that you are aware that, in stocks trading, you will not be able to get enough leverage from your brokers or even banks. Why? Did you ever thought about this matter? Use your brain to think about it. Its because in stocks, they are lending you REAL money instead of just contracts, so that you could buy and sell your shares, and the main point is to control the debt.

    Don't you wonder that in these days, there are brokers providing high leverage? (No problems with that), but what is the difference? If the leverages like 1:1000 can be given for currencies trading then why it cannot be given in stocks trading? where the risk is less than the risk in Forex!

    The truth is, margin trading in Forex doesn't means that someone is lending you, it seems essential that it is trading on discounts that government orders the banks to charge no more than 2% in USA for their orders, that's 1:50 leverage. So, the currencies belongs to the country and country belongs to its governor, then to whom the currency belongs indirectly? the currencies belongs to the government. So, if the owner is saying that, do not charge more than more or less than 2% for their orders (most likely, less than 2% for their orders) then what it is? A discount? or lending?

    Let me ask you a simple question. Do you think that brokerage firms are that much rich to lend you billions of dollars on every trade you make? Lets say that if the broker have a order of 1000 standard lots (1000 customers, 1 lot from each) at a time, it means that all customers have 1,000 USD and having the leverage of 1:100, then do you imagine what would be the amount of so called lending procedure? It turns to 100 Million Dollars, How the hell 100 Million Dollars could even be printed in just a day. Even banks lack such kind of funds for immediate delivery, brokers are far from that.

    I have done enough research on leverage, and with my understanding, I am at the conclusion that leverage in FX doesn't means lending, it means, discount trading in terms of Forex. Think about the customers, most of the brokers have 100,000 of customers and they order the minimum of 0.5 lots at some time which means 50,000 standard lots (just for an example), then where the amount will go? Will not it turn into billions?

    I think, what they do with the FX trading is, they just note that for example "A trader purchased 100 lots at such price, TP and SL". Its just a matter of electronic paper works. Its their system where orders take place (of-course in a bank's system). I don't mean to say that trades are not executed, trades are executed but its a rule of financial market that you can pay 1% now and remaining 99% after the delivery which in the matter of Forex, delivery of spot FX takes place in 2 days.

    Why you extend your positions by giving swap? That means, you want to keep using the discounts and do not have other 99% to pay, so you are delaying the transactions by giving interest (which is obvious Riba).

    Well, the main question remains same. If the FX trading is permissible or not. And, do you think that leverage is a discount or you still think that its lending/borrowing of funds. If you think that its lending/borrowing, please write why, and if you think I am right, then also write why!

    We're looking for the peace in both worlds. It is unfair that we dis-respect the orders from our God and just care about this temporary world? How much time we can live in this earth? for 100 years at most? Okay, 120 years at most. The avg is 60 years. Do you want the paradise for eternity OR paradise in this world for averagely 60 years and then hell-fire for eternity. The reason I am saying is that, I want you to think seriously and answer the question because it is the matter of Riba. Even I am not yet confirmed if dealing in Forex is okay or not. So, I thought that asking from you here will be a good idea.

    The main question remains same. It is just the information I thought to give you about leverage because it is the first reason your scholar will give you to say that it is impermissible. Information is given so that you could think enough about whether it is okay to go ahead or we should leave this profession.

    Again, the major reasons which scholars give when they say that it is impermissible:

    - Possession of currencies (We get ownership rights but only some scholars understand electronic rights)
    - Use of margin. (Scholars say that it must be 1:1, but even if that is the case, then what about long/short issue which gonna remain same even with 1:1, short (sell) means, we are borrowing one and purchasing other, in Forex, we don't borrow actually but if scholars insist on it, then tell them that even with full payment, the matter of borrowing will remain same. Without borrowing, no chance of business.) Remember that I don't think borrowing of funds exists. Specially when it is interest-free? Sigh. impossible.
    - Hand to hand. (It is an advanced world now and electronic systems are now our hands)

    I hope that you aren't bored with those details, also, I bear no responsibility if my thoughts are 100% correct (because after all, they are just thoughts)

    Best,
    PrinceWahaj

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    Registered user techboy's Avatar
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    Quote Originally Posted by samprazaan View Post
    [lang=id]yes, this is about the understand about forex trading in mind for everyone, and if they think it as a bad thing then every business is gambling too, and you are right, muslim just need to avoid the account with swap, that is not halal in islam, and i guess we get the clear discussion about forex in islam,[/lang]
    There are different belief from other religion that can be in conflict to some practices in forex and it is important that we fully understand the terms and conditions given to us before we sign up in a particular broker, but sometime we traders just sign up right away without reading the corresponding terms and conditions at the start.

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    " Trading is 70% Psychology, 15% Risk Management and 15% Strategy ! "

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    Quote Originally Posted by techboy View Post
    There are different belief from other religion that can be in conflict to some practices in forex and it is important that we fully understand the terms and conditions given to us before we sign up in a particular broker, but sometime we traders just sign up right away without reading the corresponding terms and conditions at the start.
    yes, traders with different religion need to read the terms and condition with well, that is very important so they do not need to break their rules , that is about swap free account and swap account, i prefer to choose swap free account,and i guess this account type is good for all traders too,

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    Quote Originally Posted by princewahaj View Post
    We must realize that there are many grey areas which most people (even scholars) are unable to understand. No wonders that some scholars, who are well in finance world suggests to go with it.
    those as keeping with the focus on retaining the beginning point of issues with the initials on working with the manage of evaluation, as anchoring with the distinct of limit on projection to release of proper on allocation with the risks to work with the submission of order by the market.

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    Registered user cutiekc's Avatar
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    Some times I tend to wonder why the Islam would have a different account, but I get to know that the Islam as rules which they strictly believe on. Well, fact still remains that you will loss your money in as much as you don't know how to trade and how to deal with the market, so basically learning is the main deal and the way to success.

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    Quote Originally Posted by newentry View Post
    yes, traders with different religion need to read the terms and condition with well, that is very important so they do not need to break their rules , that is about swap free account and swap account, i prefer to choose swap free account,and i guess this account type is good for all traders too,
    i do not see the trading to be relating to region in nay angle, the traders have to follow the ways of trading in this business, and that is not always going by the religion of many. in the free swap account, they use it to support and encourage the Islamic faith the more.

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    Quote Originally Posted by silverlady View Post
    i do not see the trading to be relating to region in nay angle, the traders have to follow the ways of trading in this business, and that is not always going by the religion of many. in the free swap account, they use it to support and encourage the Islamic faith the more.
    Yeah, I just think that forex trading is a general business from which any one could make money, but too bad, the region problem have got to it, which I don't even know why because I think forex trading is a good business and a normal business which we do like every day as it has to do with exchanging one currency for the other one.

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    Registered user layigold's Avatar
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    If gambling is forbidden in Islam that is understandable on the platform of religious belief but forex is not anyway related or connected with gambling.Even in Roboforex there is a provision for Islamic account where you do not receive swap and you do not pay any out as well. Business is just like any other business where you speculate and make your money. But anyone who feels his religious belief is not well disposed to forex trading should better stay off

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    Quote Originally Posted by splash View Post
    Yeah, I just think that forex trading is a general business from which any one could make money, but too bad, the region problem have got to it, which I don't even know why because I think forex trading is a good business and a normal business which we do like every day as it has to do with exchanging one currency for the other one.
    the forex business is a general business, and it can be traded any way we believe that it can help us. except for the ways of trading that is causing traders to regret trading. and the losing or swap is making some bias with the religion, i sense that in forex business.

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    Quote Originally Posted by silverlady View Post
    the forex business is a general business, and it can be traded any way we believe that it can help us. except for the ways of trading that is causing traders to regret trading. and the losing or swap is making some bias with the religion, i sense that in forex business.
    You are right, I really don't see the reason why there should be a swap free account for the Islam, I don't just get tat religion. But well, I still know that means nothing, meaning that to be able to make money from forex trading, still you have to learn and know much more on how the market works and how to handle it.

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    Muslims are very strict in a lot of things and the specific details that we have seen are of better informations that can bring in the right market source that we have valued that is when you trade forex there is a lot of good chances that you will be able to work with certain positions that well bring the right choice, so Muslim and Islamic banking and forex and anything to do with money are very serious and can help in trying to understand better terms and so its better to see if they can follow,though some dont

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